Asian markets were lower overnight, which lead to a higher U.S. dollar at that time. The same pattern was also shown at the start of the European market when the DAX initially traded lower, from the 5829 open price to 5737 support, before reversing to the 5826 highs of the day, following U.S. stock gains of around 0.7% in the first 90 minutes of trade.
As such, the dollar index was pushed to new yearly lows, and the Eur/Usd to current highs just above the 1.5000 area.
Today’s rally on the major pairs is also driven by a higher commodity market, especially oil that has broken through the 80.00 resistance area after U.S. inventory report numbers increased by a less than expected 1.3 million barrels from the previous week.
From a technical point of view, these recent oil moves are not a surprise as TheLFB Elliott Wave team announced the $82 target in the past week, when oil tested the 74.90 charting areas, detail below,
Currently oil is trading around $81.50 per barrel, very close to Fibonacci resistance levels shown between 83 and 84. Volume is not as strong read over the last ten days, while the MACD is showing bearish divergence. All these reads are characteristics of wave V, which is the final sub-wave of a black wave 1), and is indicative of a reversal set-up.